I personally never buy extended warranties but there are tons of people who swear by them. Check out your credit card benefits since many have extended warranty policies for electronics in some shape if you use the card for the purchase. For example, our Discover More card will double the extended warranty of an electronic up to one additional year.

3. Automobile Collision – If you are driving an old, paid off car, you should cancel this part of your auto insurance policy.

I don’t carry a collision policy on my car, but that is slightly stressful to think about. My car is only worth about $4000, so I figure that I have a good shot of being fine until it’s time for me to move on to something better. So far, so good and I’m keeping my fingers crossed.

Yes, but it is nice to have when you need it. My husband had the rental policy on his insurance when he got into 2 different major accidents in college, so we’ve already made our money back even if we never use it again. He has this policy and I don’t. Our Geico plan doesn’t allow rental car coverage unless you have collision coverage as well.

I didn’t even know this existed. I’m choosing to continue to bask in my ignorance.

8. Life Insurance for Children – Statistically, most kids don’t die. They also don’t leave heirs. Put the money towards an educational fund or IRA instead.

I agree that kids don’t have heirs and it’s probably unnecessary, but I would increase my emergency fund to include enough for horrendous expenses. If any of you carry insurance policies on your children, could you help fill in my blanks? Why did you choose to get this policy?

9. Flood Insurance – Unless you live in a flood plain or a place that has a history of water problems, you won’t need this.

Well, I live right outside of Houston, TX, so I need this policy. Thankfully, we haven’t needed it yet, but 2 of our friends have…

11. Credit Card Loss Insurance – Since your loss is limited to $50 or less, this is unnecessary.

This is also true. My credit card was left (read- I totally forgot about it at the register) at an out-of-state restaurant before and it took one 3 minute phone conversation to have it marked as lost and 3 days to get the new card in the mail.

12. Mortgage Life Insurance – Since a life insurance policy could be used to pay off your house and for other bills too, it would be a better idea.

I agree 100%. Why have a billion specific policies rather than one cover-all?

13. Unemployment Insurance – An emergency fund would make this unnecessary.

Well, I partially agree. An emergency fund will cover you during unemployment, but you will be using your money instead of an insurance company’s money. My husband and I have stable enough jobs to feel secure with a solid emergency fund, but if we worked in a volatile field, I would look into this.

14. Disease Insurance – Good medical insurance will cover whatever ails you, so you don’t have to get a policy for each specific disease.

I hadn’t even heard of these policies either. My medical insurance covers all ailments, so I feel secure.

15. Accidental-Death Insurance – These policies are often fraught with stipulations that make them useless anyway.

Yes, these policies usually have a ton of if’s, and’s, or but’s. I wouldn’t usually buy one, but my job supplies me with a small accidental death policy anyway.

Did you see any policies on the list that you’d feel uncomfortable by skipping?

Comments

Geez! I didn’t even know a lot of these types of insurance existed! Wild! I agree with you all. Private Mortgage Insurance, a lot of times, isn’t an optional item to have.

One thing that I have pondered over is whether or not people should buy a house if they have less than 20% of the cash for a downpayment. I am leaning towards “yes” due to the tax deductions and other benefits you have from home ownership.

Yes, I do have riders (which cost next to nothing!) on my own 20-year term life insurance policy to cover each child for $15,000 (we have 3) in the event of their death. The policy is w/USAA. I know it is worth it since my children will automatically be insurable regardless of any chronic illness or disease they might suffer from in the future.

I have my mother as a secondary beneficiary of the kids’ and my L.I. benefits since she is legally designated to care for the kids should my husband and I die at the same time.

I have term life insurance for myself and a whole policy for my son. I chose to buy him one because the agent told me that I can sign it over to him when he becomes an adult, and its cash value will be worth $400 000. I should really check the policy again to see if this is accurate.

I have Accidental Death and Dismemberment through work. It was incredibly cheap to ad 1.5 my salary to my coverage. I’m in sales and am in my car a lot, so my chance of dying from a car accident is higher than average. Unfortunately, a colleague of mine got to take advantage of this when he was in a head on collision last year.

My Personal Finance Journey, I’d say that it wouldn’t be silly to buy a house with less than 20% down if it still would be less debt than 20% of your take home pay. I don’t really think of the PMI too much, but it’s always better to have manageable, affordable debt so that you have some space to breath even during rough financial times.

Of course, because I do believe keeping a mortgage affordable, that sometimes means that there is no benefit. For example, we’ve never been able to get tax benefits from our house since the standard deduction is twice as much as the interest of our house ever was in one year.

I finally took the plunge and canceled collision on my car, although I’m still nervous about doing so. Which is silly, since even if I left it in place and got in an accident, my car is worth so little according to KBB that I’d probably literally get nothing after the deductible.

So now the only one on the list that I have is flood insurance, which I am definitely keeping despite not being in a flood plain. It’s very cheap, and I’ve seen too much flooding in the area over the years to feel comfortable without it.

Jackie – I know what you mean about flood insurance. Here in the Chicago area, there have been some torrential rains multiple times this summer. Just this past weekend, there was flooding in the area. I saw a quote by someone in a local suburb where a lady said she lived in her town for 29 years and never saw anything like it at all. Clearly, the unexpected can happen.

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Disclaimer

We are well meaning folks that are not investment professionals or financial advisors. Please feel free to have fun here, and take this information in the spirit of entertainment, as it is not financial or legal advice, For that, seek an appropriate professional. Your actual financial decisions are your own responsibility. Thank you.